"Should this be cause for concern among shareholders?"
As several have pointed out, NO!!
This has ocurred for years. At 18. at 22, at 44, at 66, at 80, at 100, etc, etc. The resulting numbers are just bigger at the higher prices. Most of the sales (and all of Martins's) are in the last year before the options expire and are planned sales of 1/12 of the expiring options. By holding for 9 years, it is huge statement of confidence in GILD. There are millions of options still vested, in-the-money, and worth hundreds of millions. The only concern should be the corporate governance issues that allowed so many options to be granted. Of course no one "knew" that the stock would go from 12 to 119 in ten years. And without HCV, it would not have. So until the HCV purchase in late '11, GILD had "only" doubled in the prior 6 years. SInce '11, it is up ~500%.
So, starting at the beginning: on July 28,2014, I printed out the the values of the GILD options expiring 01/15/2016 after the market closed. SInce then, I have done the same on 04/05/2014; 05/21/2105; 05/29/2015; and 06/01/2105. I made a few assumptions, including the following: (1) when the spread was such that there was no time time premium, I used the stock price to determine the price of the option; (2) I generally used a price around the mid-point between the bid and ask; and (3) I dealt only with options with strike prices between 55 and 120. The following is a summary of the increases of the options at the various dates, as well as the price increases of the underlying stock - :
07/28/14; 04/05/15; 05/21/15; 05/29/15; 06/01/15
GILD 91.46; 98.43 (7.6%); 111.22 (21.6%) ; 112.27 ( 22.8%); 114.22 (24.7%)
55s - 14.4%; 47.9%; 50.7%; 55,5%
60s - 12.3%; 48.5%; 51.5%; 56.8%
65s - 11.9%; 52.8%; 54.4%; 62.2%
70s - 8.8%; 52.8%; 56.0%; 62.7%
75s - 9.7%; 56.8%; 60.9%; 68.9%
80s - 3.6%; 53.3%; 58.6%; 65.3%
85s - (2.8%); 51.9%; 55.2%; 65.8%
90s - (11.1%); 49.5%; 52.7%; 61.9%
95s - (15.5%); 41.9%; 47.8%; 57.4%
100s - (22.6%), 34.8%; 40.1%; 50.0%
105s - (30%); 25.5%; 31.4%; 39.7%
110s - (35.5%); 18.2%; 23.2%; 32.6%
115s - (44,3%); 5.4%; 8.2%; 18.9%
120s - (50%); (5.5%); (1.6%); 5.4%
Results - 75s are best for last 3 times, but 65s through 85s are very close to same results, and 55s are best for first time, when the common was up only 7.6%. 115s and 120s are worse than the stock at all 4 times. 110s, 115s, and 120s have increased a lot as stock has gotten over 110. Overall, it is better to be deep in money if modest gains, somewhat in the money (with strike 15-20% below price) with good gains, near at-the-money if great gains (50%+), and out-of-the-money if spectacular gains (100%+). Plan to update with big moves or near expiration or both.
Keep the guesses coming. I posted the query on IV and Investorshub too, so I will see if there are any responds there. Probably will post results tonight.
Time for a quiz!
On July 28, 2014, GILD closed at 91.46. If one bought all the Jan 16 LEAPS that end in a 5 or 0 (60,65,70...110,115,120,, etc), which one has done the best and which one did the worst on a percentage basis? And what are the percentages for the best and worst (with the common up ~22% during the same time)?
You understand that it is not Barrons, but an analyst that Barrons is quoting, right? Most analysts use IMS and have for years (and pay a lot of money for it). For some reason, almost noone uses both IMS and Symphony. The IMS numbers have been wrong for all the HCV players this calander year - actually worse for ABBV on a percentage basis.
The analysts have been low on GILD earnings estimates for 4 of the lasr 5 quarters - very wrong 3 quarters. They appear to be very wrong again this quarter (and as a result for the whole '15 year too). How wrong will depend on OUS HCV sales. JMO.
"LMAO!!!! You were saying this same bs at .56.....all the way to 1.50."
And the pumpers were saying the same things all the way down from 3+ to .56. Where is Bottum now? Oh right, he was pumping from 8 to 2-3 and then disappeared. There just is no denying that this is not a truly investable company - it is a gamble -period. If one wants to roll the dice, be my guest. I will just sit back and watch others pump/bash/etc.